You purchased 100 shares of a stock for $22 a share and sold them 7 months later for $26 a share. The initial margin was 70% and the maintenance margin was 35%. You received no dividend income. Your holding period return was _____ while it would have been ____ if not used margin for the purchase. Ignore interest and trading costs.
A) 10.29%; 6.99%
B) 18.18%; 25.97%
C) 25.97%; 18.18%
D) 11.90%; 17.87%
E) 10.45%; 11.90%

Question

Quizplus · Accepted Answer

The holding period return using margin is calculated as the profit divided by the initial investment. Without margin, the return is calculated based on the total cost of the shares.

You Purchased 100 Shares of a Stock for $22 a Share